Deutsche Telekom could end up with up to 20 per cent of the merged Pacific Century CyberWorks-Cable & Wireless HKT and about GBP4 billion (HK$47.22 billion) if it launches a bid for Britain's Cable & Wireless (C&W). It is understood Deutsche Telekom is considering making a formal bid for C&W in a transaction worth about US$50 billion. Two German magazines yesterday reported Deutsche Telekom was close to making an offer. Analysts believe C&W is a prime target given the German company might find it difficult to make a purchase in the US. C&W is one of Britain's largest telecoms-services providers, after British Telecommunications, and until recently was Hong Kong's largest telecoms company through its 54 per cent ownership of HKT. Following a proposed merger of HKT and CyberWorks, C&W is set to receive between 11.2 per cent and 20.9 per cent of the merged entity's stock and between GBP3.8 billion and GBP7.1 billion in cash. A C&W official yesterday said the company would not know its exact stake in the merged entity - to be called PCCW-HKT - until the transaction was completed, but said it was likely the British giant would own up to 20 per cent of the new company and about GBP4 billion. The disposal of HKT to CyberWorks is part of a campaign by C&W under chief executive Graham Wallace to turn the company into a more focused provider of data and Internet Protocol infrastructure. C&W has an Internet backbone network in the US, following a deal with MCI WorldCom, and is among the top three Internet network providers in Europe, and owns a 52 per cent stake in Australia's C&W Optus. A major stake in PCCW-HKT would make the company attractive to Deutsche Telekom, analysts said, as it would give the German company its first exposure to a leading broadband Internet entertainment service that might fit well with Deutsche Telekom's T-Online Internet Service Provider. For Deutsche Telekom, acquiring C&W would not only thrust it into markets where its presence is limited, but solve its lack of market share in the US. Yesterday C&W shares were up 5.94 per cent in early trade, and Deutsche Telekom up more than 4 per cent.
